Hamilton's housing market rode a rollercoaster in 2017. The first few months of the year were unprecedentedly frenzied – homes sold for prices that were huge amounts higher than the same months in 2016, which was itself a hot market.
Then, in April, the provincial government signaled its intent to cool the Toronto and Greater Golden Horseshoe markets, and everything changed.
"We definitely believe that had an impact on buyer expectations, at a minimum," said Anthony Passarelli, market analyst for the CMHC specializing in Hamilton and Burlington.
This is a year where we've already begun living into the predictions economists and market-watchers have for 2018. Prices have already come down since the spring; sales numbers have plunged.
So if you see headlines (even here) next spring proclaiming year-over-year price drops, remember that the decline is not suddenly starting.
Here are three things to watch for in Hamilton's housing market in the coming year.
Buyers taking more time
Hamilton's housing market was a seller's market for years, but now buyers have more houses to choose from and more time to decide.
"There's more research going into this," said Conrad Zurini, broker with Re/Max Escarpment.
Those days where buyers were skipping home inspections and offering oodles over the asking price with no conditions? Not happening in 2018, Zurini said.
"The rise (was) so great; that's why you saw people forgoing home inspections, thinking whatever issue the house has the increase in price will solve it."
But Zurini said the market hasn't flipped all the way in favour of buyers. In a "regular" market, his firm does about 15 to 18 showings of a house to get a sale.
Recently, his colleagues have said it's been about eight to 10 showings per sale, meaning buyers aren't dragging their feet forever.
Last summer, local agent Daniela Tofano said that switch wasn't an easy thing to get used to for sellers, especially those whose neighbours had sold near the peak.
"We have to reeducate ourselves, the sellers and even the buyers that it's a different market," she said then.
Sellers of detached houses in Hamilton and Burlington in November, the most recent month of stats from the local real estate board, spent an average of 37 days waiting for a successful offer, up from 25 days a year ago.
And condo sellers had to wait an average of 36 days, compared to 26 days on the market in November 2016.
Impact of the stress test
Local realtors warned their clients this fall about a new "stress test" coming into effect in the new year.
New rules take effect Jan. 1 that require borrowers to pass a "stress test" on their mortgages, where banks qualify them based on whether they could still afford their monthly payments if interest rates were 2 per cent higher.
In addition to lowering the amount buyers can finance, the move is expected to dampen demand by allowing fewer people to qualify for loans. But that in turn could bring prices lower as sellers find fewer buyers able to pay premium prices.
To qualify, buyers might have to lower their price range by 15 per cent or more and consider different neighbourhoods.
But the rules announced in October didn't seem to spur much of a hustle locally by people trying to beat the new rules.
"I was expecting to see a bit of an upsurge toward the end of this year so people could get in," said incoming Realtors Association of Hamilton-Burlington president Jack Loft. "We haven't seen that."
Zurini said he doesn't buy the argument that the market will slump from the mortgage rules.
"People will not be discussing the stress test by Feb. 1," Zurini said. "Personally, I think the boogeyman of the stress test is not really there."
Prices steady or dipping compared to 2016
Forecasts predict slight increases or falling prices in 2017 compared to 2016.
The Canada Mortgage and Housing Corp. forecasts that Hamilton will end 2017 with an overall average price of between $555,000 and $575,000.
That's significantly higher than the average price for 2016 of $497,055.
But for next year, it expects the average price to be somewhere between $535,000 and $585,000.
But remember, the price declines have been happening through the summer and fall of 2017, said TD economist Michael Dolega.
"I'm pretty sure that it's going to be a decline in Hamilton (prices)," he said. "There's very little doubt in my mind that that will happen."
TD predicts a 4 per cent decline in Ontario's average home prices in 2018. But, Dolega notes, that decline will be a year-over-year comparison that includes the overheated spring 2017 prices.
"Most of that is behind us," he said.
A recent Teranet/National Bank index released for November showed the extent to which year-over-year price growth was smaller toward the end of 2017 than in that spring heat.
"In early 2017, average prices were growing (at rates like) 30 per cent year-over-year, which is clearly unsustainable and worrying in some ways," Dolega said. "It's not the kind of dynamic that can persist in the market."
He said the government's action served to spark an "orderly rebalancing" of the market.
"It was a welcome development from the perspective that the further this would've ran the more painful it would've been on the downside," he said. "What has happened is as good a story as could've taken place."